Posts filed under “Taxes and Policy”
Roger Altman, former deputy secretary of the Treasury, thinks so:
"Today, regulatory authority is divided among the Federal Reserve,
the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, the Office of Federal
Housing Enterprise Oversight, the Securities and Exchange Commission,
the Commodity Futures Trading Commission, state banking regulators and
state insurance regulators. That’s too many players.
What’s more, this balkanized system supervises only half of the
relevant financial universe. It neglects investment banks, hedge funds
and institutions like mortgage companies that issue asset-backed
securities. The assets of these unregulated entities total about $10
trillion — which is the same amount we see on the regulated side.
The unregulated institutions pose particular risks because they are highly leveraged and financed primarily through short-term money markets rather than customer deposits. And unlike big banks, many of them do not disclose their finances to the public."
If taxpayers are going to be on the hook for the bailouts, than we should be able to set the parameters of what is allowable in terms of capital minimums and leverage.
Yes, this is regulation. No, this is not a Free Market policy. But neither was the bailout of Bear Stearns, nor the Housing Bailout, nor the imminent bailout of Fannie and Freddie and maybe even FDIC.
"The Bear Stearns case vividly illustrated the dangers that come with lack of regulation and transparency. Although Bear Stearns carried $300 billion in liabilities, it was not supervised by the Fed. When it began to fail, the Fed correctly judged that the system might not withstand the shock and arranged a rescue. But suddenly, the Fed was standing behind both the larger banks it regulates and the major investment banks it does not. This cannot continue.
The next president must first create a single framework for the major financial borrowers, administered by the Federal Reserve alone. This wider regulatory umbrella should be more conservative. In particular, the minimum levels of capital and liquidity that financial institutions are required to maintain should be higher than they have been in recent years. And the institutions should put in place better and more detailed systems for reporting — internally as well as to regulators and the public — on all the risks they are taking."
Beware the false dichotomy that many pundits present when it comes to these issues. The choice isn’t between regulation and no regulation — its between Federal Bailouts or no Federal Bailouts.
You want the bailout? You take the regulation with it. Otherwise, don’t ask the Fed or Treasury or Congress for help, you disingenuous phony free market hypocrites . . .
How the Fed Can Fix the World
ROGER C. ALTMAN
NYT, September 2, 2008
What this country really needs is less tranparency in earnings reports, and more wiggle room for corporate reporting:
We are governed by utter idiots . . .
Similarities and Differences: A comparison of IFRS and US GAAP
Click for PDF
"The Securities and Exchange
Commission signaled the demise of U.S. accounting standards, kicking
off a process Wednesday that could ultimately require all publicly
listed American companies to follow an international model instead.
in two steps, the shift could eventually cut costs for companies and
smooth cross-border investing. At the same time, investors worry it
will create confusion, especially during the transition. Other critics
worry that the international system offers too much wiggle room for
companies, compared with the more precise rules enshrined in U.S.
The SEC’s proposal would allow some large
multinational companies to report earnings according to international
accounting beginning in 2010. The SEC estimates at least 110 U.S.
companies would qualify based on their market capitalization, among
other factors. The agency also laid out a road map by which all U.S.
companies would switch to International Financial Reporting Standards,
or IFRS, beginning in 2014, at the expense of U.S. Generally Accepted
Accounting Principles, the guiding light of accountants for decades.
The proposals will be open for public comment for 60 days and could be finalized later this year."
Anything that artificially boosts earnings is great for America . . .
SEC Moves to Pull Plug On U.S. Accounting Standards
KARA SCANNELL and JOANNA SLATER
WSJ, August 28, 2008; Page A1
SEC May Let Companies Abandon U.S. Accounting Rules
Bloomberg, Aug. 27 2008